INTERVIEW-Somali minister looks to turn global goodwill to hard cash

Mon Apr 15, 2013 6:53am EDT

Related Topics

* Somalia debts stand at $2.2 billion or more

* Government revenues rely on rickety airport, port

* World Bank, IMF won't lend more till arrears cleared

* Islamist suicide bombing shows fragility of recovery

By Edmund Blair

NAIROBI, April 15 (Reuters) - Somalia's finance minister has his eye on conferences in Washington, London and beyond in the next six months to shore up international support for a slow recovery whose fragility was exposed by this weekend's suicide bombings in Mogadishu.

Mohamud Hassan Suleiman can count on a wave of goodwill on his travels but needs more than diplomatic backing to steady a nation emerging from two decades of war and anarchy with debts of $2.2 billion and state revenues of just $84 million a year.

For the first time in years, Western and other nations have accredited ambassadors to the new government of President Hassan Sheikh Mohamud, although most still live outside Somalia. His government has also won recognition from the International Monetary Fund, an important step on the road to rehabilitation.

But gains on the ground are shaky, demonstrated in bloody fashion on Sunday when al Qaeda-affiliated bombers killed at least 30 people in Mogadishu, a city without a single working fuel station and whole neighbourhoods of wrecked buildings.

"Somalia is coming out from a dark period," Suleiman told Reuters in a telephone interview, adding Sunday's attacks in the capital highlighted the need to support a government that still relies on African peacekeepers to maintain security.

"They are giving us their attention but we are asking them to change that to substance," said the 62-year-old minister, a banker from the diaspora who once worked at Somalia's central bank, an institution he is now seeking to resuscitate.

"It needs money to train the security forces, to equip them properly and to pay them properly," he added.

Western states and others have focused on humanitarian aid till now but efforts are shifting towards bilateral support for the new government, whose ability to act could have an impact far beyond the borders of the nation of 10 million people.

A more stable Somalia could help curb piracy, which has flourished in the political vacuum and according to the World Bank costs the global economy about $18 billion a year. Western nations also worry a slide back to chaos will allow al Shabaab Islamists, ejected from Mogadishu two years ago, to regroup.

But Suleiman said the government needs to show Somalis it can deliver change, if it is to extend its control beyond Mogadishu and other urban centres, a difficult task when its revenues almost all come from a battered port and tiny airport.

GAUGING SUPPORT

"We are doing everything we can, not to disappoint the people," said Suleiman, who travels to a donor meeting hosted by the World Bank in Washington on April 20 before attending a broader London conference to build support for Somalia on May 7.

The Somali government also wants to draw more backing at a June 1-3 meeting on African development in the Japanese city of Yokohama, and at a gathering in September in Brussels.

The meetings will help gauge support for debt relief before starting a formal process that could see Somalia qualify for the Heavily Indebted Poor Countries initiative, known as HIPC, that could offer debt forgiveness and restructuring.

To do that, Suleiman and his government must draw up a sustainable poverty reduction programme and show Somalia has the backing of 70 to 80 percent of its creditors, experts say.

"It is going to be a long process and we are just starting that. HIPC is not something we can use immediately," he said.

Suleiman put Somalia's debt at $2.2 billion, although experts said that was based on a 2010 World Bank figure and interest accrued since then meant it was probably higher.

About half the debt is owed to the World Bank, IMF and African Development Bank. Arrears to international financial institutions (IFIs) must be repaid, whether by Somalia or by creditors on its behalf, before they can offer new funds.

But IMF recognition was a valuable start, Suleiman said, adding it "opens doors for us to deal again with the IFIs."

The 2013 budget figures show revenues of about $84 million, of which about $54 million is forecast to come from domestic sources and the remainder in external assistance. Spending is put at $114 million, leaving a $30 million deficit.

"We are hoping to cover this gap by increasing the revenue or by external assistance," said Suleiman, who spent more than 30 years as an international banker - most recently in Britain - before he joined Mohamud's government.

His former employer, the central bank, is in no position now to help out with debt issuance. "We are just undertaking a comprehensive public finance management reform and the bank is part of it," he said, adding it was not yet "fully functioning."

But the central bank's freshly painted building is one sign of a gradual recovery in Mogadishu, where traffic now sometimes clogs the potholed roads and construction sites have sprouted.

At least one new petrol station has been built but has yet to open so drivers still rely on vendors selling jerry cans of fuel on the roadside.

"I believe there is an opportunity," said the minister. "We hope to use this opportunity." (Editing by Richard Lough; Editing by Jon Boyle)

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